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LRB-3614/1
ARG:emw&ahe
2017 - 2018 LEGISLATURE
September 12, 2017 - Introduced by Representatives Tauchen, Zimmerman,
Kooyenga, Macco, Kulp, Duchow, Gannon, Hutton, Brandtjen,
Skowronski, Ott, Wachs, Murphy, Allen and Pope, cosponsored by Senators
Harsdorf, Stroebel, Kapenga, Ringhand and Bewley. Referred to Committee
on State Affairs.
AB492,2,7 1An Act to repeal 125.28 (5) (b) and 125.54 (7) (a) 2.; to renumber 125.54 (7) (a)
21.; to renumber and amend 125.51 (4) (br) 2. and 125.69 (1) (a); to amend
3125.02 (10), 125.02 (15) (b), 125.02 (16) (intro.), 125.02 (21), 125.04 (9), 125.10
4(4), 125.25 (2) (b) 5., 125.28 (5) (c), 125.29 (3) (h), 125.295 (1) (a), 125.295 (2) (a)
51., 125.295 (2) (a) 6. a., 125.295 (2) (a) 6. b., 125.295 (2) (a) 6. e., 125.295 (3) (a),
6125.295 (3) (b), 125.295 (3) (c), 125.33 (9), 125.51 (2) (am), 125.51 (3) (f), 125.51
7(4) (a) 1., 125.52 (1) (b) 1., 125.52 (3), 125.54 (1), 125.54 (8), 125.545 (1) (d),
8125.58 (1), 125.68 (4) (c) 3m., 125.68 (9) (b), 125.68 (9) (d), 125.68 (10), 125.69
9(title), 125.69 (1) (b) 1., 125.69 (1) (c), 125.69 (1) (d), 125.69 (3), 125.69 (4) (e),
10125.69 (6) (a), 125.70, 139.01 (5), 139.01 (6), 139.01 (10), 139.03 (2x) (a), 139.04
11(4), 139.06 (3), 139.08 (4), 139.09, 139.11 (2), 139.11 (3), 139.11 (4) (b) 2., 139.18
12(2), 139.22 and 346.93 (1); and to create 125.02 (5g), (5i) and (5k), 125.295 (3m),
13125.51 (4) (br) 1. i., 125.51 (4) (br) 2. b., 125.52 (8), 125.525, 125.53 (3), 125.69
14(1) (a) 3., 125.69 (1) (b) 3., 125.69 (4) (c) and 139.01 (2o) of the statutes; relating

1to:
creating a distillpub permit authorizing the manufacture, rectification, and
2sale of distilled spirits; retail interests relating to distillpubs and brewpubs;
3quotas for retail intoxicating liquor licenses; location and production limits on
4brewpubs; retail sales of intoxicating liquor by brewers; retail licenses held by
5wineries and closing hours for retail sales by wineries; small winery cooperative
6wholesalers; minimum customer requirements for alcohol beverage
7wholesalers; and granting rule-making authority.
Analysis by the Legislative Reference Bureau
Distillpub permits
This bill creates a distillpub permit issued by the Department of Revenue that
authorizes the manufacture, rectification, and sale of intoxicating liquor other than
wine (distilled spirits). The bill authorizes certain retail interests and activities of
distillpubs and, if a person holds both a distillpub permit and brewpub permit,
modifies the permissible retail interests for the brewpub.
Under current law, alcohol beverages are generally distributed to consumers
under a three-tier distribution system: the producer sells to a wholesaler; the
wholesaler sells to a retailer; and the retailer sells to a consumer. With specific
exceptions, no person may sell outside the three-tier system and no person may sell
alcohol beverages to a consumer unless the seller possesses a license or permit
authorizing the sale. A Class “B" license authorizes the retail sale of fermented malt
beverages (beer) for consumption on or off the premises. A “Class B" license
authorizes the retail sale of intoxicating liquor for consumption on the licensed
premises and, subject to various restrictions, the retail sale of intoxicating liquor in
original packages for consumption off the licensed premises. Intoxicating liquor
includes wine and distilled spirits. Class “B” licenses and “Class B” licenses are
generally issued together for establishments such as restaurants, bars, and taverns.
Class “A” and “Class A” licenses authorize the retail sale of, respectively, beer and
intoxicating liquor in original packages for consumption off the licensed premises.
Class “A” licenses and “Class A” licenses are often issued together for establishments
such as grocery stores, liquor stores, and convenience stores. A “Class C" license,
which may be issued only for a restaurant, authorizes the retail sale of wine by the
glass or in an opened original container for consumption on the premises. Each of
these retail licenses is issued by a municipality.
Also under current law, DOR issues permits to producers of alcohol beverages.
A manufacturer's permit or rectifier's permit issued by DOR authorizes the
permittee to, respectively, manufacture or rectify intoxicating liquor and sell it to
wholesalers. Current law prohibits a manufacturer or rectifier from holding an
interest in a retail liquor license and prohibits a retail liquor licensee from holding

an interest in a manufacturer, but a manufacturer's permit or rectifier's permit
authorizes limited retail sales without a retail license. Under the manufacturer's
permit or rectifier's permit, a manufacturer or rectifier may make retail sales of
intoxicating liquor manufactured or rectified on the premises, for consumption on or
off these premises.
Under current law, to authorize commercial brewing operations, DOR may
issue a brewpub permit or a brewer's permit, but no person may hold both permits.
To be eligible for a brewpub permit, a person must meet certain requirements,
including that 1) the person manufactures not more than 10,000 barrels of beer per
year in all locations, 2) the person operates on the brewpub premises a restaurant
for which a Class “B" license is issued, and 3) the person does not hold, or have an
interest in, a Class “A” license or a Class “B" or “Class B" license other than one issued
for a restaurant on brewpub premises. A brewpub permit authorizes, among other
activities 1) the manufacture of up to 10,000 barrels of beer per year, 2) the retail sale
of alcohol beverages through a Class “B" or “Class B" license issued for the brewpub's
restaurant on brewpub premises, and 3) the annual distribution of up to 1,000
barrels of the brewpub's beer to retailers, excluding the brewpub's own retail
locations.
This bill creates a distillpub permit, issued by DOR, authorizing all of the
following: 1) the manufacture and rectification of distilled spirits not exceeding a
total of 300,000 gallons per year at all distillpub locations; 2) the bottling of distilled
spirits manufactured or rectified by the distillpub; 3) the possession and storage of
intoxicating liquor on distillpub premises; 4) the transportation of distilled spirits
manufactured or rectified on the distillpub premises between these premises and
other distillpub premises or the distillpub's retail locations (discussed below); 5) the
sale and delivery of distilled spirits manufactured or rectified by the distillpub to
wholesalers; 6) the sale and delivery of up to 30,000 gallons per year of distilled
spirits manufactured or rectified by the distillpub to retailers, except that retail
locations operated by the distillpub (discussed below) are not counted toward this
30,000 gallon limit; 7) the retail sale on distillpub premises, without a retail license,
of distilled spirits manufactured or rectified by the distillpub, in original unopened
packages or containers, for off-premise consumption; 8) the retail sale and direct
shipment to consumers at their residences or other designated addresses, without
a retail license, of distilled spirits manufactured or rectified by the distillpub if the
consumer arranges while physically present on the distillpub premises to receive
periodic direct shipments from the distillpub; and 9) the sale of alcohol beverages at
retail in accordance with the terms of any retail license authorized to be held by the
distillpub (discussed below). The bill defines “rectify” or “rectification” as blending,
mixing, purifying, refining, aging, or otherwise processing distilled spirits, including
with wine or other ingredients, but not including distilling. For DOR to issue a
distillpub permit to an applicant, the applicant must meet all of the following
requirements: 1) the applicant manufactures or rectifies not more than a total of
300,000 gallons of distilled spirits per year in all locations; 2) the applicant operates
a restaurant on the distillpub premises; 3) the applicant holds a “Class B" license and
the restaurant is located on the “Class B” licensed premises; 4) on the “Class B"

licensed premises, the applicant offers for sale intoxicating liquor made by others,
in addition to its own distilled spirits; and 5) except as discussed below, the applicant
does not hold, or have an interest in, a Class “A" or “Class A” retail license, a Class
“B" or “Class B" retail license, a “Class C" retail license, a wholesaler's permit, a
liquor manufacturer's permit, a rectifier's permit, a brewer's permit, or an alcohol
beverage warehouse permit. A distillpub may hold only the following retail licenses:
1) any “Class B” license for which the licensed premises includes a restaurant on
distillpub premises; 2) not more than six “Class B” licenses in addition to those that
include a restaurant on distillpub premises if any of these additional six “Class B”
licenses was initially issued prior to January 1, 1983; 3) a Class “B” license for any
premises for which a “Class B” license is issued; 4) one Class “A” license and one
“Class A” license, both issued for the same premises and initially issued prior to
January 1, 1990; and 5) if the distillpub also holds a brewpub permit issued in the
same name, any Class “B” or “Class B” or “Class C” retail license authorized for a
brewpub. Each retail license authorized for a distillpub must be issued in the name
of the distillpub. A “Class B” license issued to a distillpub is not subject to the liquor
license quota system and, unlike most other retailers, a distillpub is not required to
obtain a Class “B” license in order to hold a “Class B” license. A distillpub may hold
permits for not more than six distillpub locations. If more than one permit is issued
to a distillpub, the distillpub is not required to manufacture or rectify distilled spirits
at each location for which a permit is issued. The bill also includes various provisions
that treat distillpubs similar to manufacturers, including provisions that allow
intoxicating liquor to be shipped directly to distillpubs and to be sold by wholesalers
to distillpubs for production purposes.
This bill also modifies the interest restrictions applicable to brewpubs. Under
the bill, if a brewpub also holds a distillpub permit in the same name, the brewpub
may hold any retail license authorized for the brewpub or distillpub, and the
brewpub may self-distribute its own beer directly to any of these retail licensed
premises, without this distribution counting toward the brewpub's 1,000 barrel
self-distribution limit.
Quota for retail liquor licenses
Current law prohibits a person from selling alcohol beverages at retail unless
the seller possesses a license or permit authorizing the sale. Except when issued to
a winery, a “Class B" license authorizes the retail sale of intoxicating liquor for
consumption on the licensed premises and, subject to various restrictions, the retail
sale of intoxicating liquor in original packages for consumption off the licensed
premises. Current law imposes a quota on the number of “Class B" liquor licenses
that a municipality may issue, subject to certain exceptions. The quota is generally
determined by a formula based on the number of licenses previously issued by the
municipality and the municipality's population. For purposes of the quota system,
a reserve “Class B" license is a “Class B" liquor license first issued on or after
December 1, 1997.
This bill increases municipalities' liquor license quotas by increasing by 10
percent, rounded up to the nearest whole number, the number of reserve “Class B"
liquor licenses that a municipality may issue.

Brewpub regulations
Under current law, a person is eligible for a brewpub permit issued by DOR if
the person meets certain requirements, including that the person manufactures not
more than 10,000 barrels of beer per year in all locations. A brewpub permit
authorizes, among other activities, the manufacture of up to 10,000 barrels of beer
per year and the retail sale of beer through a Class “B" beer license issued for a
restaurant on the brewpub premises. A person may not hold more than six brewpub
permits.
This bill increases, from 10,000 to 20,000 barrels per year, the amount of beer
that a brewpub may manufacture. The bill also increases, from six to 12, the number
of locations for which a person may hold a brewpub permit.
Allowing brewers holding brewer's permit to sell wine and distilled spirits
for on-premises consumption
Under current law, a brewer's permit issued by DOR authorizes a brewer to,
among other activities, sell at retail, without a retail license, the brewer's own beer
and other Wisconsin-made beer at the brewery premises and at one off-site retail
outlet of the brewer. A brewer may make retail sales of intoxicating liquor only if the
brewer held a retail intoxicating liquor license on June 1, 2011.
This bill allows any brewer holding a brewer's permit to sell intoxicating liquor
at retail for on-premise consumption at the brewery premises or the brewery's
off-site retail outlet. As under current law, intoxicating liquor sold by the brewer
must be purchased from a wholesaler.
Winery regulations
Current law allows a winery to hold a retail “Class B" license authorizing the
retail sale of wine. A winery operating under a retail “Class B" license may not
remain open for retail sales of wine between the hours of 9 p.m. and 8 a.m.
This bill changes the closing hour for wineries operating under a retail “Class
B" license from 9 p.m. to 2 a.m., but allows municipalities to establish, by ordinance,
more restrictive closing hours for these wineries.
The bill also specifies that a winery may hold a Class “B" license authorizing
the retail sale of beer if the winery holds, for the same premises, a “Class B" license
authorizing the retail sale of wine.
Eligibility criteria for membership in a small winery cooperative wholesaler
Under current law, between October 1 and December 31, 2008, DOR was
authorized to issue intoxicating liquor wholesalers' permits to small winery
cooperatives (cooperative wholesalers). Only wineries certified by DOR as small
wineries can be members of a cooperative wholesaler. A small winery is defined as
a winery that produces and bottles less than 25,000 gallons of wine in a calendar
year. The only alcohol beverage product a cooperative wholesaler can sell and
distribute is the wine of its members.
This bill changes the definition of small winery so that a winery that produces
and bottles less than 50,000, rather than 25,000, gallons of wine in a calendar year
may become a member of an existing cooperative wholesaler.

Eliminating requirement that beer and intoxicating wholesalers have a
minimum number of customers
Under current law, a beer wholesaler must annually sell and deliver beer to at
least 25 separate and independent retail licensees or wholesalers, and an
intoxicating liquor wholesaler must annually sell and deliver intoxicating liquor to
at least ten separate and independent retail licensees or permittees. If a wholesaler
fails to satisfy this requirement, certain penalties apply and the wholesaler's permit
cannot be renewed.
This bill repeals this requirement.
For further information see the state and local fiscal estimate, which will be
printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB492,1 1Section 1. 125.02 (5g), (5i) and (5k) of the statutes are created to read:
AB492,6,22 125.02 (5g) “Distillpub” means a permittee under s. 125.525.
AB492,6,4 3(5i) “Distillpub group" means a distillpub, including all premises for which the
4distillpub holds a permit issued under s. 125.525, together with all of the following:
AB492,6,75 (a) All distillpubs that share membership with the distillpub in a controlled
6group of distillpubs, as determined according to rules applicable under 26 USC 5041
7(c) (4).
AB492,6,98 (b) All distillpubs considered with the distillpub as one taxpayer under the
9federal Internal Revenue Code.
AB492,6,1010 (c) All franchisees, as defined in s. 553.03 (5), of the distillpub.
AB492,6,1211 (d) All franchisees, as defined in s. 553.03 (5), of the distillpub's franchisor, as
12defined in s. 553.03 (6).
AB492,6,1313 (e) The franchisor, as defined in s. 553.03 (6), of the distillpub.
AB492,6,15 14(5k) “Distillpub premises" means any premises covered by a permit issued
15under s. 125.525.
AB492,2
1Section 2. 125.02 (10) of the statutes is amended to read:
AB492,7,32 125.02 (10) “Manufacturer" means a person, other than a rectifier or distillpub,
3that ferments, manufactures, or distills intoxicating liquor.
AB492,3 4Section 3. 125.02 (15) (b) of the statutes is amended to read:
AB492,7,75 125.02 (15) (b) With respect to intoxicating liquor, the manufacturer, the
6rectifier, the distillpub, or the exclusive agent designated by the manufacturer or,
7rectifier, or distillpub.
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